Backlash over DIY giant Focus' plans to slash its rent bill

Ailing retailer Focus DIY has outlined drastic plans to cut off rents to landlords of unprofitable stores - sparking a new row over deals under which struggling companies can escape their financial obligations.

The company is asking creditors to approve a 'company voluntary arrangement' - a deal which would allow Focus to escape full bankruptcy.

But the British Property Federation, which represents landlords, yesterday questioned firms' use of CVAs and so-called pre-pack administrations to escape rent commitments.

Drastic rent cut plans: Focus

'People are getting away with questionable deals,' said a BPF
spokesman. 'Many landlords are angry about the way they have been
screwed in these deals. Moving the burden from one group of creditors
to another makes no sense.'

Ian Cheshire, chief executive
of Kingfisher, which owns Focus's bigger rival B&Q, said: 'The
system is being exploited by some managers to get rid of what they
don't like in one go.'

He would not comment on the Focus
case, but added: 'It is being presented as, "If you don't agree to
this, we'll go bust." This system is making it easier for people to
pick and choose which bills they're going to pay.'

Last autumn, Focus shut 38 stores that it said did not make money. The stores have been sitting empty ever since.

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Under
the CVA, Focus would pay rates on the empty stores. Landlords would be
paid rent to the end of the next month. But thereafter, they would
receive no rent. Instead they would have to make do with their share of
a £4.5million one-off payment.

Focus has warned that if the
CVA is not approved, banks will not grant a new overdraft facility and
that would mean the entire group would fall into administration.

Landlords
of the 180 stores where Focus, with 4,572 employees, continues to trade
would have to accept their rents being paid monthly rather than
quarterly. Other suppliers' terms would remain unchanged.

Focus's
biggest creditor is its owner Cerebus, to whom it owes £208million.
That will give Cerberus votes at the CVA meeting, due to be held on
August 24. Cerebus's votes should ensure that Focus will secure the 75
per cent of backing from creditors to have the CVA approved.